Smartphones to surge in 2010

Smartphones will account for more than half of total handset market value in 2010, according to Informa Telecoms & Media forecasts.

It predicts smartphone sales are to grow by 33.5 per cent year-on-year in 2009 and by 36 per cent in 2010. However it said despite smartphones only accounting for 27 per cent of the total number of handsets sold next year, they will represent 55 per cent of the value of the total handset market and 64 per cent in terms of profitability.

Informa principal analyst and co-author of Future Mobile Handsets report Malik Kamal-Saadi said: “The strong volume growth rate and high smartphone ASPs (average selling prices) make this the most profitable segment in the current mobile phone market. In 2010, we expect profits from smartphones to represent an impressive 64 per cent of total mobile handset market profits.

“As demand for mid-tier handsets declines, competition in the smartphone segment is set to intensify which is forcing manufacturers to innovate and differentiate their products in terms of hardware, software and content.”

Market leaders like Nokia, Samsung, LG, Motorola and Sony Ericsson are being challenged by RIM, Apple, HTC and Palm. Informa said it expects the market share of the latter four vendors to jump to 35 per cent of all smartphones sold in 2009 from 32 per cent in 2008 and 24 per cent in 2007.

It said the key to the success of new entrants is the adoption of new smartphone operating systems that have been built from scratch and better reflect the realitiues of modern mobile device requirements.

In addition, they are not burdened with the support of a long legacy of devices and content already in market but added the challenge for these players is to keep pace with innovation rather than getting trapped in the progressive OS upgrade cycles.

Kamal-Saadi added: “Volume market leaders have responded with a multitude of me-too iPhones, offering multi-touch and an enhanced internet experience but true innovation is still lacking from many incumbent OEMs’ portfolios.

“However, under the pressure of competition some incumbents such as Nokia and Microsoft are now revamping the architecture of their OSs to keep pace with innovation and some such as Motorola, Samsung, and Sony-Ericsson are now radically changing their terminal software strategies. These players (Motorola, Sony-Ericsson, and Samsung) have opted for Google’s Android as key OS to bring innovation to their smartphone portfolios. These changes will completely transform the smartphone market landscape and could potentially lead to the emergence of new leaders in the mobile handsets market.”